The FINANCIAL — According to 2010 third quarter statistics data out of the whole 160 million foreign investments in Georgia 21,650,000 is comprised of American shares, of which 11 million is distributed to transportation and communication. There is virtually no interest in construction and rural economy.
The Statistics Department notes that the whole figure of American investment in 2010 increased more than in the last 2 years. But in comparison to 2009-2010 in 2007 American investment in Georgia reached 2 billion.
The reason for the decreasing investment share on the Georgian market was security issues caused by the war in August 2008. Rakeen which is the largest property developer established in the United Arabs Emirate is the owner of 51% of Poti seaport. In 2008 they started renewing the infrastructure by building new terminals and docks. After air raids Poti suffered material loss of 272,000 GEL added to its temporary inability estimated at approximately 2 million GEL, and new docks, implementing new technologies etc. 200 million USD has been allotted for investment in this direction.
These days none of the American companies see any threat of war again. The representative in Georgia of Gary Titizian, founder of of Levon Travel, said that Titizian started his business in Georgia in 1996. This period was considered very hard, but he still continues to invest money, in spite of the war in 2008.
FH Bertling LTD Georgia is doing business as Bertling Transport Group and provides project logistics and multi-model transportation solutions. Its Branch Manager noted that they don’t see any threat of war again and there is a stable business environment now, which provides safe investment conditions: “A stable business environment, clear tax laws will enable investment and promote business,” said Pipe. “Clear understanding by the customs service of how the various laws are applied will help greatly.”
As far as he remembers the company has never had any problems concerning investment security. Pipe sees that the overall situation improved step by step in Georgia. “Five years ago laws were changing extremely fast – infrastructure especially in the transport sector has improved greatly. Police service has also been improved,” said Pipe.
As well as all these companies the Government is very supportive and constantly working on improving investment security issues: “Safety depends on the size and prominence of the investor,” said Mr. Paul Clark, the President of the TBSC Consulting company. “If a large American company wished to invest in Georgia it is very likely that they would be very well treated by the Georgian Government and could perform better than existing Georgian companies in the same field. The Government is positively involved in contacts with new investors of this type. Speaking for ourselves, we are a small company and have never had any safety issues.”
Still, the comparison of investment security conditions between now and about 5 years ago seems to be hard to answer for him.
“On one hand the Government has made great improvements in the tax code with good input from business. On the other hand, there are disturbing press reports on how the tax code is administered. The Government seems to recognize this problem and is taking steps to administer matters better such as the appointment of a tax ombudsman. In contrast with these positive steps that are happening at the micro-level, reporting on high profile cases make the country seem to be much less safe than in the past,” noted Mr. Clark.
“Alliance Group Holding considers energy, telecoms, finance, food processing, agriculture, and IT to be more safe and attractive for American investors.” American businessmen are very favourable about the investment climate in Georgia, of course with more potential improvements expected,” said Aieti Kukava, Chief Executive Officer of AG Holding.
As Kukava declared American businessmen appeal to local insurances as well as international reinsurance companies, movable assets insurance mostly. Nika Kitiashvili, Manager of the Georgian branch of Chartis insurance company told The FINANCIAL that about 10 American companies insured their properties in their organization.
Not only insurance companies but also Georgian Banks have also built confidence among US Businessmen. ”Customs are working remarkably well in Georgia with zero corruption. I feel Georgian Customs must apply customs laws so all branches in Georgia have a clear understanding of how to apply various issues of customs law,” said Steve Pipe, Branch Manager, FH Bertling Ltd Georgia.
“Well it’s not really been a problem, I am not faced by American investors knocking on my door saying someone has taken away my business, it’s not something AmCham is dealing with at all right now,” said David Lee, President of AmCham. “So I have never seen AmCham as a protector for the business, I have always seen it as a partner.”
“The main difficulties for American companies in Georgia are the issues they meet in the intellectual sphere,” said US Ambassador in Tbilisi John Bass, according to 24 Hours newspaper.
“While making investments in Georgia American business pays attention to the same details as any other foreign companies do. They want there to be a stable environment, clear laws and legislation, which gives them the possibility to do their business and solve conflicts in fair conditions,” stressed Mr. Bass.
Discussion about this post